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You Have the Wrong Idea about Corporate Culture

Earlier this year, there was an article right here in IndustryWeek entitled, “Culture is More than Free Snacks and Ping-Pong.” The author wrote, “I suspected [corporate culture is] something more than free snacks and ping-pong tables in the common areas.”

I’ve found several other articles in other publications, with similar titles: “Culture is More than a Ping Pong Table”, “Think Culture is About Ping-Pong Tables? You are Wrong!” “Culture is More than Just a Ping-Pong Table in the Break Room.”

I teach corporate culture in the business school at a state college here in Ohio. Invariably, my students initially see corporate culture through the “ping pong tables and snacks” lens. The semester is generally about half over by the time I’m able to get them to discard this notion.

One finds it necessary to ask: “Why is corporate culture so widely (and so mistakenly) seen to be synonymous with employee morale—i.e., ping pong tables and snacks?”

There are several reasons, I think. First, “corporate culture” is difficult to define or even to describe. Employee satisfaction, on the other hand, is easier to describe. It’s not difficult to enumerate what one sees when morale is low, and compare that to what one sees when morale is higher. So, when managers (and others) talk about culture change, they go right to a concept they think that they understand better: employee morale. (Managers often have limited and naïve ideas as to just what actually improves morale, and that’s where ping-pong tables come in. But we’ll save that discussion for another article.)

Related to this is the notion that employee morale is seen as being relatively easy to improve, at least as compared to changing culture (which, remember, managers have a hard time defining anyway).

“Morale is low … what can we do?”

“How about ping pong tables?”

“Our culture needs to be changed, improved…what can we do?”

“Ummmm … how about ping pong tables?”

Another (and more important ) issue is that culture is correctly seen as closely related to the manner in which individuals and teams within an organization work with one another, but those relational activities are wrongly seen as removed from the core interests of the business. When discussing and planning, say, the implementation of a new ERP system, what’s the likelihood that any manager in the room will bring up the impact of the new system on the corporate’s culture? Or the impact of the company’s current culture on its ability to implement the system successfully? Pretty much zero, right? Have you ever heard a discussion that attends to the relationship between your company’s culture and its approach to budget development? My guess is no. How about the relationship of culture to new product development? Or strategic planning? Again, I’d be inclined to guess that few readers have ever been a part of such discussions.

So, if culture isn’t seen as relevant to anything about the “business,” what is it relevant to? “Well,” managers think, “How about employee morale?” (Of course, that also says that managers also don’t see employee morale as central to their “business interests” until it gets so bad that it’s seen as hurting those interests.)

What I’m saying here is that corporate culture is not the same as, identical to, or a synonym for employee morale. Employee morale is an outcome, a product of corporate culture. Corporate culture and employee morale are related in the way that baseball is to hot dog sales. A better baseball team will attract more fans, who will buy more hot dogs. But none of us would recommend promoting hot dog sales as a way of improving the team’s won-loss record. You can get improved morale by improving the culture, but you can’t improve the culture by installing ping-pong tables. Or by being nicer to employees. Or paying them more.

So, OK … corporate culture is not employee morale. What is it, then? Like art, love, truth and beauty, we can describe it with an apt illustration. Let’s imagine two companies, Acme Manufacturing and Zebulon Industries. Imagine further that Acme Manufacturing has a “Fix the Problem” culture, while Zebulon Industries has a “Fix the Blame” culture. With no more information than I’ve given you, you can probably, with reasonable accuracy, describe the two cultures and how they differ. You would be able to provide solid, educated guesses to questions like: “What are communications like at Acme Manufacturing? What are they like at Zebulon?” or “What do planning and decision making look like or Acme and at Zebulon” or “What’s the approach to motivating performance at Acme versus at Zebulon?” I might even ask you something like, “Which company has the better budget process and why?” and you’d be able to come up with an answer. My point is that we know what positive culture looks like even if we don’t quite know how to define it.

You might ask at this point: “But isn’t it also likely that Acme would have better employee morale than Zebulon?” and the answer, of course, is yes. But, remember, morale is a happy by-product of a good culture, not its source. Acme probably has better morale because it has a better approach to communications, decision-making, and motivating for performance (among other things). Just as the baseball team doesn’t have a good record because hot dog sales are good, the Acme Manufacturing doesn’t have good communications, decision-making, and motivation because it has good morale. It’s just the reverse, in fact.

In the final analysis, though, what difference does all this make? Even if managers seek to improve culture by improving morale, what harm is done? Well, I spend the entire semester with my business students answering that question, but the short version answer is this: A company’s culture is directly and substantially related to its strategic success. If, in an effort to improve this strategic asset, the company simply, say, installs ping-pong tables, it’s missing an opportunity to improve its strategic capability. In doing so, it’s significantly risks undermining the interests of customers, stakeholders, and, yes, employees.

At this point, you’d be justified in thinking that my reference to culture as “substantially related to strategic success” is a bit exaggerated. Let’s go back to Acme and Zebulon for an explanation. My guess is that you’d agree that Acme’s “Fix the Problem” culture gives it an advantage over Zebulon with respect to its ability to solve problems, make decisions, develop plans, generate and implement new ideas, respond quickly to environmental changes, and to respond quickly and effectively to new opportunities, right? I imagine you wouldn’t have much disagreement with my hypothesis that Acme is better able to attract, recruit, hire and more effectively train better talent than Zebulon. You probably wouldn’t contend strongly with the argument that, in the long run, it’s likely that Acme’s systems, processes, and resources were superior to Zebulon’s due to the difference in the companies’ competencies with respect to communications, decision-making, and so on. Aren’t those the fundamental elements of sustained competitive advantage? And if, as a happy by-product, Acme has better employee morale, so much the better.

Holding corporate culture and employee morale as co-equal in importance, then, isn’t just a matter of bad semantics. It’s a mistake that puts managers at risk of using corporate resources in ways that just won’t provide a good return on investment. It’s a mistake that puts managers at risk of overlooking improvement efforts that could improve the company’s strategic position. Corporate culture isn’t simply more than ping-pong tables … it’s an entirely different idea.

Rick Bohan, principal, Chagrin River Consulting LLC, has more than 25 years of experience in designing and implementing performance improvement initiatives in a variety of industrial and service sectors. He is co-author of People Make the Difference, Prescriptions and Profiles for High Performance.